By  on February 10, 2010

Further wilting of the U.S. Dockers and Signature businesses, coupled with depressed retail environments in Europe and Japan weighed heavily on quarterly and year-end results for Levi Strauss & Co.

While acknowledging 2009 was a “challenging year” for the company, management said it had laid the groundwork to build the business in the coming year by investing in global strategies for the Levi’s and Dockers brands. The company will also be looking to carve out a more meaningful segment of the women’s market.

“We made good progress in 2009, strengthening our business in a very difficult global environment,” said John Anderson, president and chief executive officer, during a conference call with analysts.

Optimism about the future aside, results for 2009 reflect a global company faced with the headwinds of weak consumer spending in nearly all of its major markets and dwindling interest in one of its key brands.

The San Francisco-based denim giant saw earnings for the three months ended Nov. 29 rise 7.9 percent to $67.2 million compared with earnings of $62.3 million during the same period a year ago. This increase was primarily due to cost reductions and favorable currency exchange.

Revenues for the period fell 4.8 percent to $1.21 billion from $1.27 billion, while sales declined 4.5 percent to $1.18 billion from $1.24 billion.

Results for the full year marked a third straight year of declines, finishing 2009 with a 33.8 percent fall in earnings to $151.9 million compared with $229.3 million in 2008 and $460.4 million in 2007.

Revenues fell 6.7 percent to $4.11 billion from $4.4 billion, and sales declined 6.5 percent to $4.02 billion from $4.3 billion.

According to the company’s annual filing with the Securities and Exchange Commission, Levi’s branded product accounted for about 79 percent of sales, or $3.18 billion, compared with 76 percent of sales in 2008 and 73 percent in 2007. Much of that growth can be attributed to a global campaign the company kicked off in the second half of the year behind the 501 style. Anderson said he plans to follow up with the introduction of another global fit and campaign this year. It’s a strategy that will likely find it’s way into the Dockers business as well, as management begins investing more heavily behind the long-struggling label.

“The Levi’s and Dockers brands are two of the largest and most powerful brands in the apparel industry, and we will further expand the reach and appeal of these brands globally,” he said.

Anderson revealed plans for the Levi’s brand to “reengage with women” with the introduction of a new range of fits. Levi’s premium denim segment has also been reorganized as a global unit in Amsterdam, which will oversee the Levi’s Vintage Clothing collection. The unit will launch a new collection dubbed Levi’s Made & Crafted for men and women, a line inspired by the company’s denim heritage.

“Although it remains a small business for us, the premium line will create buzz among denim aficionados and cast a positive halo across the brand globally,” he said.

Levi’s has faced a certain degree of resistance in widening its grasp on the women’s market. Men’s products have consistently accounted for about three-quarters of the company’s sales over the last several years.

The weak economy and low demand in the U.S. for the Dockers and mass channel Signature by Levi Strauss & Co. labels pushed revenues for the company’s Americas division down 4.8 percent for the year to $2.36 billion from $2.48 billion. Dockers accounted for 16 percent of overall sales, or $643.7 million, for the year compared with 21 percent of sales in 2007. Robert Hanson, president of Levi Strauss Americas, said declines in the Signature business were primarily the result of Wal-Mart shifting its product assortment.

The European market saw the most marked declines, with revenues falling 12.8 percent to $1.04 billion from $1.19 billion a year ago. The company said currency exchange adversely impacted revenue by $118 million, and Anderson noted that challenges were likely to remain throughout the year in the region.

The depressed Japanese market pulled revenues for the Asia-Pacific region down 3.2 percent to $706 million from $728.9 million. Excluding Japan, revenues would have increased 12 percent, according to Anderson.

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